20161028-兴业证券-A-Share_Daily_Express_17页_542kb

Summary of Industrial Securities Co., Ltd. Document

Core Content Overview

This document provides a comprehensive analysis of the Chinese and Hong Kong stock markets, including key indices, sector performance, company news, investment opportunities, and financial insights. It also includes detailed reports on specific companies, such as GoerTek Inc. and Shandong Hi-Speed Road & Bridge Co., Ltd., with their financial performance, business outlook, and investment ratings.

Key Market Indices and Performance

• SSE Composite: Closed at 3104.27, down 0.26% from the previous day, but still 0.43% higher than last Friday's close.
• SZSE Component: Closed at 10711.04, down 0.72%, and declined 0.50% for the week.
• CSI 300: Closed at 3340.13, down 0.17%.
• ChiNext: Closed at 2165.43, down 0.78%.
• HSI: Closed at 22954.81, down 0.77%.
• HSCEI: Closed at 9515.32, down 0.97%.
• Aggregate Market Volume: RMB 511.17 billion, up 12.6% from the previous session.
• Market Sentiment: Losers outnumbered winners by 2078-to-621.

Market Review

• China stocks were weak on Friday due to heavier volume and the benchmark index closing lower for the third consecutive day.
• Most sectors except financials were under downward pressure.
• Mid and small-cap stocks underperformed as investor enthusiasm was dampened by beneficial measures for infrastructure and currency depreciation.

Sector Performance

Winners:

• Financial Sector: Strong performance due to solid quarterly results.
  • Ping An Insurance (Group) (601318): +0.99%
  • China Construction Bank (601939): +0.57%

Losers:

• Construction: Continued sell-off pressure.
  • China State Construction Engineering Corporation (601668): -1.36%
  • Power Construction Corporation of China (601669): -2.98%
• Steel Makers: Weak performance.
  • Inner Mongolia Baotou Steel Union Co. (600010): -1.05%
  • Angang Steel Company Limited (000898): -1.08%
• Tourism Shares: Lagged behind.
  • Shanghai Jin Jiang International Hotels Development Co. (600754): -0.81%
  • China CYTS Tours Holding Co. (600138): -1.68%
• Chemical, Heavy Machinery, and Environmental Protection: Also among leading decliners.

Daily Headlines

• The National People's Congress is drafting a property tax law.
• Germany is reviewing the sale of Osram Licht AG to a Chinese consortium.
• ICBC will announce 3Q results on Friday.
• China Petroleum & Chemical Corp. reported a sixfold increase in profit for Q3 2016.
• Ping An Insurance reported a 15% rise in Q3 profit.
• Vanke and Wanda Cinema both saw profit growth.
• ZTO Express made its U.S. IPO debut with a price of USD 1.4 billion.
• The Congo Government supports China Molybdenum's investment in a copper project.

Investment Opportunities

• High-dividend stocks: Encouraged for long-term investment.
• Growth H-shares: Focused on "China reform and transformation" and those covered by the Shenzhen-Hong Kong Stock Scheme.
• Cyclical value stocks: Targeted for sectors like construction, environmental protection, transportation, power distribution, education, and healthcare, due to potential fiscal policy support.

GoerTek Inc. Report (002241.SZ)

• 3Q16 Earnings: Revenue of CNY 6.06 billion (+64.66% YoY), net profit of CNY 562 million (+67.40% YoY), EPS of 0.37.
• Full-Year Guidance: Net profit between CNY 1.44 billion and CNY 1.69 billion, up 15%-35% YoY.
• 4Q16 Guidance: Net profit between CNY 403 million and CNY 653 million, up 1.5%-64% YoY.
• Performance Drivers: High growth in VR and acoustics businesses, increased ASP from product upgrades.
• EPS Forecast: CNY 1.08 in 2016, CNY 1.36 in 2017, CNY 1.74 in 2018.
• Investment Rating: "Strong Buy" (Maintained).
• Potential Risks: Faster progress from competitors, slower VR industry growth, and challenges in new business expansion.

Shandong Hi-Speed Road & Bridge Co., Ltd. Report (000498 SZ)

• Q3 2016 Financials:
  • Revenue: CNY 4.2 billion (+4.3% YoY), EPS: CNY 0.22.
  • Operating profit: CNY 349 million (+26.86% YoY).
  • Net profit: CNY 248 million (+20.87% YoY).
• EPS Forecast: CNY 0.45 in 2016, CNY 0.58 in 2017, CNY 0.70 in 2018.
• P/E Ratios: 16.5x, 12.8x, 10.4x respectively.
• Investment Rating: "Buy" (Maintained).

Macroeconomic Outlook

• CPI: Expected to grow at 2.0% YoY in Q4 2016, with a base effect likely to fade by 2017.
• PPI: Likely to rise due to commodity price surges, with peak expected in April 2017.
• Economic Outlook: Fiscal policies will become more proactive to support the macroeconomy. Monetary tightening is unlikely.

Industry Research Insights

New Energy (PV)

• PV generation capacity added 20-22GW in H1 2016, a record high.
• Downstream companies may increase equipment purchases as PV power prices fall.
• Investment logic will focus on power price reduction and less grid limitations.
• PV equipment manufacturers need to cut production costs.
• Market is expected to shift from policy-driven to market-oriented.

Transportation

• ZTO Express IPO in NYSE with market cap of USD 13 billion.
• Compared to the 'big-five' express companies, ZTO has a higher number of retail service stations and direct-controlling transshipment centers.
• ZTO's PE is higher than STO but lower than YUNDA, SF, and YTO.
• The company's ROE is lower than others, indicating a self-operational model.
• Market competition is expected to intensify as rivals grow in market share.

H-Share Market Strategy

• Long-term Outlook: Bullish due to long-term prospects and low interest rates.
• Catalysts:
  • Shenzhen-Hong Kong Stock Connect to open in late November.
  • Insurance companies may increase H-share investments.
  • Social wealth to flow into H-shares as low-valued assets.
• Investment Recommendations:
  • Focus on high-dividend stocks (e.g., utilities, banking).
  • Target growth H-shares with 'China reform and transformation' concept.
  • Cyclical value stocks in sectors like construction, environmental protection, and transportation.

Conclusion

The document outlines a mixed market performance with financials showing resilience in some sectors and challenges in others. It emphasizes the importance of long-term investment in H-shares and the potential for growth in the VR and acoustics sectors. Additionally, it highlights the need for careful evaluation of macroeconomic indicators and company-specific risks.